The country sold €6 billion ($7.82 billion) of its June 2018-dated five-year and May 2023-dated 10-year fixed rate government bonds, the maximum amount it targeted. It allocated the shorter-term bond at a yield of 2.84%, and the longer-term bond at a yield of 3.94%. Both deals reached the maximum amount targeted.

The yields were the lowest since October 2010, with demand fueled by the new government, a sovereign ratings confirmation and growing expectations that the European Central Bank will cut rates Thursday.

“The result of the auction has been favored by the excellent opening of the market in response to the formation of a new coalition government,” said Chiara Manenti, strategist at Intesa Sanpaolo.

“We believe that this government has more lasting power than generally acknowledged, and see the risk of early elections in the next twelve months as extremely low,” said Giovanni Zanni, director for European Economics at Credit Suisse.

On Friday, Moody’s Investors Service affirmed Italy’s long-term government bond ratings at Baa2, and its outlook, noting both its subdued economic outlook and its resilience.

Another factor that is likely to have fueled demand at Monday’s auction is large Italian redemptions and coupon payments, totaling €12.4 billion Tuesday and €5.2 billion Wednesday, respectively, according to Citigroup data.

The prospect of more ECB action alone has moved Italian and Spanish government bond yields lower over the past few months, as has the Bank of Japan’s stimulus plan which is expected to push investors out of Japanese bonds and into higher yielding assets elsewhere, although flows have yet to materialize.

Letta’s swearing in will be followed by two confidence votes in parliament this week that the government is expected to win.